In a surprising turn of events, Representative Boehner finally got something right: Obama’s entire economics team has got to go. Many have already jumped ship, but unfortunately the worst members remain—including Timmy Geithner and Larry Summers. The sooner they are fired, the better.
Rep Boehner usually spends his time attacking seniors, people with disabilities, dependent children and widows and others on Social Security. He wants to cut their benefits—taking away their livelihood. (here)
However, he has finally found another issue: Obama’s economics team doesn’t care about job creation. (here) So far, nearly three years into the worst depression since the Great Depression, they’ve yet to turn any serious attention to Main Street. The health of Wall Street still consumes almost all of their time—and almost all government funds. Trillions for Wall Street, not even peanuts for Americans losing their jobs and homes. No one, except a highly compensated Wall Street trader, could possibly disagree with Boehner. Fire Timmy and Larry and the rest of the Government Sachs team.
But he’s only half right. According to Boehner, the problem with Obama’s team is that none of them has ever met a payroll. They do not know how to run a business. Hence, he claims, they do not know how to create jobs. What we need is a good, pro-business economics team that will cut taxes and slash regulations. Maybe bust a few unions and get rid of jobs-killing minimum wage laws. Loosen worker safety protection. Eliminate welfare (and Social Security) to increase the work incentive. It is the same old-same old—the Republican “Party of No” platform of the past three decades.
No, that is not the problem with the Obama team. Rather, it was bought and paid for by Wall Street. It is not interested in creating jobs because that is not the mission Wall Street provided. The only hope is to bring in a new team that is not beholden to Government Sachs. No one with any connection to Wall Street firms ought to be allowed in Treasury.
Putting Wall Street people on the economics teams raises two conflicts: a conflict of mission and a conflict of interest. Wall Street has no “dog in the hunt” when it comes to the health of the economy—it just wants to skim 40% off the top, inserting ever more finance into every activity, whether that is health insurance, “peasant” insurance, or “death settlements”. (see here , here , and here) Thus, the mission of Goldman alumni in Treasury is to increase Wall Street’s share. And the conflicts of interest are obvious—top officials at Treasury plan to return to Wall Street, rewarded with high paying financial sector jobs. It is no wonder that Timmy’s team could care less about job creation.
Further, formulating good fiscal policy that promotes job creation requires no experience at meeting a payroll. Running Treasury is not like running a for-profit firm. Government is not a giant business. It must operate in the public interest—not in the interest of a firm, or even necessarily in the narrow interests of firms, more generally. What might appear to be a pro-business policy might actually hurt business at the national level. Sure, firms hate regulations, decent wages and working conditions, and taxes. Many probably would support Boehner’s race to the bottom efforts—trying to lower wages and benefits to compete with the meanest labor conditions on the planet. But at the aggregate level, that policy is self-defeating, as Henry Ford recognized, because it destroys the domestic market for our nation’s output. It would only ensure a prolonged and deeper depression. Putting a business-friendly team into Treasury is probably the worst thing we could do for American business. It is precisely what President Hoover did, and we know how that turned out. The Party of No wants to do it again. Now, just what is that definition of insanity? Oh, right—try the same old policies that failed in the past.
Indeed, the private sector is not going to lead us out of this depression, anyway. Real recovery is going to require government initiative, starting with job creation by government. And we will need direct job creation, with government paying the wages and benefits for perhaps 12 million new jobs. (here) This ain’t rocket science. We’ve got perhaps 25 million people who want jobs (or more hours) and we’ve got billions of hours of work that needs to be done. Government can play match maker. Match 12 million workers to tasks that need to get done. That will create demand for private sector output, which will create more jobs.
So the private sector does have a role to play, but the Party of No’s platform of cutting wages and benefits and regulations is not the answer. Rather, an immediate payroll tax holiday will benefit both workers and firms, lowering the costs of retaining existing workers and of hiring new ones—while boosting consumption out of higher take-home pay. As government employment increases, that will generate the demand required to get Main Street back on track.
So, the problem is not that Geithner’s team does not know how to meet a payroll. Instead, the real tragedy is that the economics team has been running policy that is against the public interest. Policy has been operated in Wall Street’s interest, helping it to meet the payrolls of Goldman and other bloodsucking vampire squids. That is the true scandal, and that is why the Obama economics team must go. This is not a partisan issue. It is a national priority.
Oh, and while we are at it, hire Elizabeth Warren. (here) That, too, should not be a partisan issue. It is a national imperative. If necessary, make it a recess appointment. The Party of No voted against consumer protection. It is steadfastly on the side of predatory lending. Why should it have any say over who will do the protecting of consumers against the predators?